Correlation Between Primerica and Midwest Holding

Can any of the company-specific risk be diversified away by investing in both Primerica and Midwest Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Primerica and Midwest Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primerica and Midwest Holding, you can compare the effects of market volatilities on Primerica and Midwest Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Primerica with a short position of Midwest Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primerica and Midwest Holding.

Diversification Opportunities for Primerica and Midwest Holding

0.53

Correlation Coefficient

Primerica  Midwest Holding

Very weak diversification

The 3 months correlation between Primerica and Midwest is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Primerica and Midwest Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midwest Holding and Primerica is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Primerica are associated (or correlated) with Midwest Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midwest Holding has no effect on the direction of Primerica i.e., Primerica and Midwest Holding go up and down completely randomly.

Pair Corralation between Primerica and Midwest Holding

If you would invest  25,716  in Primerica on September 5, 2024 and sell it today you would earn a total of  4,141  from holding Primerica or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Primerica  vs.  Midwest Holding

Primerica

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Primerica demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Midwest Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midwest Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Midwest Holding is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Primerica and Midwest Holding

The main advantage of trading using opposite Primerica and Midwest Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primerica position performs unexpectedly, Midwest Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Midwest Holding will offset losses from the drop in Midwest Holding's long position.

The idea behind Primerica and Midwest Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.